EU Post Offices Watch and Wait As Postal Liberalization is Slowed Down

BRUSSELS-Executives at European post offices are waiting to see what happens next now that the recent resignation of the 20 European Union Commissioners -- who resigned in a dramatic sweep last month as a result of a fraud scandal --will delay postal liberalization just as it was finally picking up momentum.

A key concern for European post offices is the resignation of European Commissioner Martin Bangemann, who is in charge of industrial policy, telecommunications and postal affairs for the European Union, and who will probably not return as a commissioner. While some post offices didn't agree with all of Bangemann's views on liberalization, he was considered a positive force and rallied strongly for the passing of liberalization. Bangemann's successor may not be as positive a force.

"Bangemann was a strong pro-liberalization force affecting the postal industry," said Stephen Davie, a spokesperson for Royal Mail. "And, now that he is gone, a very strong ally to liberalization has gone from the commission."

But Charles Prescott, vice president of international business development at the Direct Marketing Association, said that whoever takes over Bangemann's position, "that person is going to be just as pro-liberalization as he was."

Despite the fact that a new president of the commissioners has been nominated-the former prime minister of Italy Romano Prodi--a spokesperson for the EU said the current president Jaques Santer will be in charge until Prodi is approved by Parliament-which will probably take place next month--and that the commissioners will conduct only routine and urgent business while waiting to be replaced. In addition, commission officials reportedly said that it is unclear exactly how many initiatives will be delayed and for how long.

But, Prescott said that despite the fact that the resignation will slow things down bit, "liberalization is inevitable, and its really a question of when. I don't think there is going to be a dramatic postponements."

The decision for commissioners to resign came on the heels of proposed legislation introduced last month to set a deadline for full liberalization of EU's postal servcies universal servcie and parcel delivery.

Under EU rules, liberalization would abolish postal monopolies in the 15-nation union in two steps. In addition, the EU would establish an independent regulator to regulate prices, protect consumer interests and promote and ensure fair competition, and allow post offices the freedom to form joint ventures, partnerships and make acquisitions beyond the previous £20m limit.

Liberalization must be endorsed by the EU commissioners before it is forwarded to EU Telecommunication ministers and the European Parliament for adoption. A decision must eb made no later than Jan. 1. 2001, and postal service cannot be regulated until 2003.

Many European postal officials agree that Europe's post offices must act immediately to become more competitive and not wait until the continent's postal markets are liberalized, and believe liberalization can offer customers receive lower costs, better servcies, more choice as a result.

Commercialization of the postal sector, they believe, allows postal services to respond to and meet customer needs in a fully competitive market lace where the cross border parcel and express market is growing at double the rate of the domestic letter market, and the best postal companies are in competition to handle business from most geographical locations.

"Business customers who send international mail know that there are now a number of companies competing for their business," said Richard Dykes, who spoke at a recent Institute for Economic Affairs Conference on the future of European Postal Services in Brussels last month

"They are no longer restricted to just one supplier," he said. "They have a choice to send mail through their national postal service, through postal companies from another country, or through a courier network."

But, while Dykes said many companies are reviewing their market positions and challenging the existing regulatory framework--and expanding into other regional markets or diversifying products and services-liberalization is still moving slowly.

Currently, only Sweden and New Zealand are now operating in fully liberalized market places. And, while Germany, the Netherlands, and Australia have reduced the levels of monopoly protection during the 1990's, they have fallen short of full liberalization. At a European level, the 1997 Directive liberalized only a minute percentage of European postal markets.

"So slow has progress been that there is now a risk that liberalization is out of kilter with commercialization in the leading countries," said Dykes.

But, Dykes said that this marketplace is important for customers, and said that the UK Post Office wants to see real progress towards liberalization of European markets within a stable and clear regulatory framework.

"Competition best protects the interests of consumers and leads to the most efficient allocation of resources," he said. "And…liberalization is a critical factor if we are to deliver tangible improvements for customers."

It is a dangerous tendency to focus on liberalization as the goal, he added, rather than as a means of creating the competitive environment which is necessary to achieve an efficient postal service for all customers.

"My contention is that postal services cannot afford simply to stand idly by waiting for the debate on liberalization to conclude," said Dykes. "There is much that can and must be done now to improve services to customers."

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